New start-up invests in both companies and people

The Bay Area is well-known for investors who bet big on young companies. But now, those investors can also bet on young people who have a high chance of being successful with the help of a start-up called Upstart.

Ian Shakil is the founder of a tiny company called Augmedix.

"We're creating an app and a service for medical doctors that's powered by Google Glass," he said.

Also working with other wearable devices, he's among the first in a field where investors might be hard to find. But Shakil can take his time because a group of backers have already invested in him.

"Actually I was looking for a runway to help me explore what I wanted to do -- that's exactly what upstart provides," said Shakil.

Upstart is a brand new company where investors bet on people and not on startups.

"You can invest in a startup, but most startups frankly fail. And everybody knows that. But the people who work in those startups actually continue on. They get new jobs, they work in other startups," said Upstart CEO and co-founder Dave Girouard.

Recent graduates like Shakil create profiles and have 60 days to gather enough investors to meet their goal.

Shakil raised $55,000 and has to pay his investors back over10 years.

But here's the twist: he pays a percentage of his income that could add up to more than $55,000. Or it could be less.

"The backer, the investor, actually benefits when the person does well," said Girouard.

For young graduates who want to be entrepreneurs but need to pay the rent, experts say Upstart could be just the ticket as long as they really understand what they're getting into.

"You're indebted to a very large group of backers for the next 10 years of your life. It's a big decision," said VentureBeat's Christina Farr. "When you're in your 20s you just have more time, fewer responsibilities so most people say that's the dream age to start a company."

And it's not just cash because backers make more when their upstarts do well. They're encouraged to be mentors, and help them out.

"Not just paying them back, but also the fact that they've publicly you know endorsed me. And I want to do good by them and I feel honored to have their support and I want to return the favor over the long run for sure," he said.